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Time to let MBA tuition rise at McGill Add to ...

At McGill University's Desautels Faculty of Management, the tuition for an MBA degree is just $1,672 a year for two years, plus another $2,000 or so in annual administrative and other fees. Even the president of the MBA student association calls the price "too good to be true." It is paradise, and no wonder the Quebec government doesn't want to let the university raise its tuition to $29,500 a year (administrative costs included). But it is an illusory paradise.

A good business education doesn't come that cheap. That is, at heart, the illusion of the "Quebec model" in which extensive public services are free, or nearly so. The price is Canada's highest provincial tax rates, and an enormous debt. All those services only look free.

McGill says the actual cost of running its program is $22,000 a year, of which tuition and government subsidies pay $12,000; other school programs have to subsidize the remaining $10,000. "We think that's backwards," says Peter Todd, the dean of Desautels. The MBA students have five years of work experience when they begin, and within a year or two double their salary, on average, and earn over $100,000. Other school programs shouldn't have to subsidize this elite one.

Education Minister Michelle Courchesne says the province will claw back the extra money if McGill goes ahead. "They [McGill]say that charging $30,000 will let them increase the quality of their teaching and compete with other universities in Canada, the United States and others in the world. I cannot accept that argument because we have excellent schools." Saying they're excellent doesn't necessarily make it so. It is true that McGill is 95th on the Financial Times list of the world's top 100 business schools. But five other Canadian universities are ahead. All five charge vastly more. And no other Quebec business school is in the top 100. "Our position has eroded because we haven't been able to invest," Mr. Todd says of McGill. "We're arguably one of the best 25 universities in the world. We say it should have one of the best 25 MBA schools in the world. Quebec should want that and I think Quebec does want it."

The University of Toronto's Rotman School of Management, 45th in the world in the 2010 rankings of the Financial Times, charges more than $36,000 tuition in each of two years; the Richard Ivey School of Business at the University of Western Ontario, ranked 49th, charges $64,000 for one year. What will happen to poor and middle-class students if McGill hikes tuition? About $4,000 from each tuition fee goes to a bursary and scholarship fund, up from the current $400. The school could, if it chooses, allow 20 per cent of students to enroll for free, says Mr. Todd. Or it could subsidize 50 per cent of the tuition costs for 40 per cent of students. Separately, a financial institution offers Desautels students an $80,000 credit line at prime plus half a point. It's not paradise, but it's not an illusion, either.

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